In the securities research industry, so called “sell-side firms” provide, among other things, research regarding securities (such as stocks or bonds) to, among others, so-called “buy-side firms,” which are typically institutional investors such as mutual funds, hedge funds, pension funds, etc. Particularly for equity research, sell-side firms typically employ a number of analyst teams that analyze and publish research reports about equity securities for publicly-traded companies in different industry sectors and/or geographic regions. For example, a sell-side firm may have a North America pharmaceuticals research team that analyzes North American publicly-traded pharmaceutical companies, a North America oil services research team that analyzes North American publicly-traded oil services companies, a North America semiconductors research team that analyzes publicly-traded companies that make and sell semiconductor products, and so on. The sell-side firm might also have corresponding European and/or Asian research analyst teams.
The analyst teams typically include a primary analyst and several research associates, though some teams may have other positions as well. These research teams generate numerous different types of research touch points for consumers of the research (e.g., the buy-side firms). The research touch points may include research reports (e.g., published electronic or hard copy reports), one-to-one telephone calls or meetings with contacts at the buy-side firms, tailored or blast emails and voicemails to such contacts, and/or other events such as seminars, conferences, corporate road shows, and meetings with corporate management.
A sell-side firm also typically employs salespeople who facilitate the distribution of the work product of the various research teams to appropriate contacts at the buy-side firms. The contacts typically are associated with one or more investment funds or accounts of the buy-side firm. A sell-side salesperson typically has contacts at many different buy-side firms, and those contacts may be interested in research work product from many different analyst teams at the sell-side firm. One role of a sell-side salesperson is to alert and distribute to his/her contacts work product from the various sell-side analyst teams.
Often equity research resources generated by the sell-side firm are provided to various buy-side firms and accounts without direct charge. Instead, buy-side firms compensate the sell-side firm for research by utilizing the brokerage services of the sell-side firm to execute trades. The price paid by the buy-side firm for trade execution is intended to compensate the sell-side firm for brokerage services as well as for any equity research resources consumed by the buy-side firm. Accordingly, buy-side firms typically direct their trade execution business to sell-side firms that provide valuable equity research. One common method utilized by buy-side firms is a broker vote. According to a typical broker vote process, a buy-side firm polls its research consumers (typically including contacts at the buy-side firm of the sell-side firm) to identify the sell-side film or firms that provide research valued by the research consumers. Research consumers may be any buy-side firm personnel who consume equity research, such as fund managers in the buy-side firm and/or their analyst teams. In some embodiments, broker votes may be limited to personnel that make trading decisions based on equity research. The buy-side firm then selects sell-side firms for execution services based on the results of the vote.